Stop and think. OK. Now resume reading. Who you gonna believe?
The tag line of the joke in which the guy comes home and finds his wife in bed with his best friend. His friend insists that it is an optical illusion and asks, who you gonna believe, me or your lying eyes?
Endless pundits, “analysts”, talking heads are jabbering at you every minute. What makes you think they have your interests at heart? They have their own interests at heart. They will say foolish and feckless things to attract attention to themselves, and on occasion they will (randomly) make a correct prediction. The more radical and the louder their comments the more likely they will attract attention to themselves.
In some cases they are knowingly or unknowingly spreading misinformation — especially journalists who are the lick spittle running dogs of the unwashed public. Amusingly some analysts have suggested the magazine cover indicator — when you see a company on the cover of Time sell it immediately.
The only antidote to this unremitting hype is the chart.
At present the punditry is wringing its hands about the recovery which had gone too far too fast and blah blah blah.
Everyone’s instincts are saying this as everyone is paranoid and masochistic at this point. Ignore your instincts. The chart says that the trend is intact. That is the general case.
The particular case is that we are observing another instance of the surge, drift and flush pattern we have pointed out previously. Notice in the chart above how the end of the flush has occurred on climactic volume. What made this particular case difficult was the apparent end of the flush on a big upday followed the next day by an extreme powerbar down.
This is like standing in all courage in the batter’s box and finding out the pitcher is throwing heat high and inside — like about head level.
But now it appears that the pattern is reasserting itself. Remember, appears. Price is now progressing upwards after an impressive power bar. Now we wait for the old high to be taken out, or for the low of the flush (now a Basing Point) to reach down for the stop.
So, who you gonna believe?